Published March 14, 2009

No cash call on the horizon, says NOL

By VINCENT WEE

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THE rumours were laid to rest, but only after they had exacted their toll. Three days and some $200 million in lost market value later, Neptune Orient Lines (NOL) finally went public yesterday to state that it was not undertaking a rights issue.

'The company . . . is not undertaking a rights issue. The company reiterates that, in the course of its business, it continually evaluates all available options to improve its performance and strategic position,' NOL said in a midday announcement.

The stock price plunged as much as 12.7 per cent on Tuesday after a Dow Jones report said that the company was considering a US$250 million rights issue. This came on the heels of Temasek stable-mate Chartered Semiconductor's US$300 million issue the previous day and the fall in its share price that followed. NOL's nervous investors, too, bailed out of the counter, which finally closed 8.3 per cent lower at 93.5 cents.

The rout continued the next day with NOL shares falling another 7.5 per cent to a 52-week low of 86.5 cents as investors rushed for the exit. The counter recovered somewhat to 88 cents on Thursday before yesterday's announcement sent it soaring back to close at $1.01, just a cent below where it started the week.

If investors had held their ground, they would be little affected. But among those who bailed and got caught out, questions were asked about why a clearer response was not made right at the outset if the company was sure of its intentions. NOL declined to elaborate further beyond its SGX statement.

Some market watchers have suggested that the national shipping line may have been testing the waters for a cash call and then pulled back when it saw the fierce market reaction during the week. NOL has already seen revenue drop 6 per cent as it plunged into a US$149 million loss in the fourth quarter.

The group's last major cash raising exercise was in 2003 and there was talk of further fund raising ahead of a possible bid for P&O Nedlloyd at the time.

While NOL has spoken of taking advantage of opportunities, there seems to be little reason to increase cash at this time since the line's previous bid for Hapag-Lloyd is no longer on the cards and there are no obvious targets on the horizon.